Author Archives: Azel José

ASSOCIATION FOR THE STUDY OF THE CUBAN ECONOMY, PAPERS AND PROCEEDINGS OF THE TWENTY-FIFTH ANNUAL MEETING, JULY 30-AUGUST 1, 2015

ASCE: Cuba in Transition: Volume 25

Papers and Proceedings of the Twenty-Fifth Annual Meeting,  July 30-August 1, 2015

All papers are hyperlinked to the ASCE Website and can be seen in PDF format.

wwwPreface

Conference Program

Table of Contents

Reflections on the State of the Cuban Economy Carlos Seiglie

¿Es la Economía o es la Política?: La Ilusoria Inversión de K. Marx Alexis Jardines

Los Grandes Retos del Deshielo Emilio Morales

Preparing for a Full Restoration of Economic Relations between Cuba and the United States Ernesto Hernández-Catá

Economic Consequences of Cuba-U.S. Reconciliation Luis R. Luis

El Sector Privado y el Turismo en Cuba Ante un Escenario de Relaciones con Estados Unidos José Luis Perelló Cabrera

The Logical Fallacy of the New U.S.-Cuba Policy and its Security Implications José Azel

Why Cuba is a State Sponsor of Terror Joseph M. Humire

The National Security Implications of the President’s New Cuba Policy Ana Quintana

Factores Atípicos de las Relaciones Internacionales Económicas de Cuba: El Rol de los Servicios Cubanos de Inteligencia Enrique García

Entrepreneurship in Post-Socialist Economies: Lessons for Cuba Mario A. González-Corzo

When Reforms Are Not: Recent Policy Development in Cuba and the Implications for the Future Enrique S. Pumar

Revisiting the Seven Threads in the Labyrinth of the Cuban Revolution Luis Martínez-Fernández

La Economía Política del Embargo o Bloqueo Interno Jorge A. Sanguinetty

Establishing Ground Rules for Political Risk Claims about Cuba José Gabilondo

Resolving U.S. Expropriation Claims Against Cuba: A Very Modest Proposal Matías F. Travieso-Díaz

U.S.-Cuba BIT: A Guarantee in Reestablishing Trade Relations Rolando Anillo, Esq.

Lessons from Cuba’s Party-Military Relations and a Tale of “Two Fronts Line” in North Korea Jung-chul Lee

The Military, Ideological Frameworks and Familial Marxism: A Comment on Jung-chul Lee,“A Lesson from Cuba’s Party-Military Relations and a Tale of ‘Two Fronts Line’ in North Korea” Larry Catá Backer

Hybrid Economy in Cuba and North Korea: Key to the Longevity of Two Regimes and Difference Young-Ja Park

Historical Progress Of U.S.-Cuba Relationship: Implication for U.S.-North Korea Case Wootae Lee

Estimating Disguised Unemployment in Cuba Ernesto Hernández-Catá

Reliable Partners, Not Carpetbaggers Domingo Amuchástegui

Foreign Investment in Cuba’s “Updating” of Its Economic Model Jorge F. Pérez-López

Global Corporate Social Responsibility (GCSR) Standards With Cuban Characteristics: What Normalization Means for Transnational Enterprise Activity in Cuba Larry Catá Backer

Bienal de la Habana, 1984: Art Curators as State Researchers Paloma Checa-Gismero

Luchas y Éxitos de las Diásporas Cubana Lisa Clarke

A Framework for Assessing the Impact of U.S. Restrictions on Telecommunication Exports to Cuba Larry Press

Measures to Deal with an Aging Population: International Experiences and Lessons for Cuba Sergio Díaz-Briquets

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THE CHURCH, POPE FRANCIS, AND CUBA

Raul-Castro-Pope-FrancisWorld Affairs Journal September/October Issue, 2015.

José Azel

Eight hundred years ago, the Magna Carta laid the foundations for individual freedoms, the rule of law and for limits on the absolute power of the ruler.

King John of England, who signed this great document, believed that since he governed by divine right, there were no limits on his authority. But his need for money outweighed this principle and he acceded to his barons’ demand to sign the document limiting his powers, in exchange for their help.

King John then appealed to Pope Innocent III who promptly declared the Magna Carta to be “not only shameful and demeaning but also illegal and unjust” and deemed the charter to be “null and void of all validity forever.” Thus from the beginning of the conflict between individual rights and unlimited authority, the Church sided with authority. It is a position that, with notable exceptions has, and continues to characterize the conduct of Church-State affairs.

In 1929, the Holy See signed with Benito Mussolini’s Fascist government the Lateran Treaty which recognized the Vatican as an independent state. In exchange for the Pope’s public support, Mussolini also agreed to provide the Church with financial backing.

In 1933, the Vatican’s Secretary of State Eugenio Pacelli (later Pope Pius XII) signed on behalf of Pope Pius XI, the Reich Concordat to advance the rights of the Catholic Church in Germany. The treaty predictably gave moral legitimacy to the Nazi regime and constrained the political activism of the German Catholic clergy which had been critical of Nazism. Similarly, advancing the Church’s interests in Cuba is the explanation given for the Church’s hierarchy coziness with the Castro regime.

For most of us the Catholic Church is simply a religion, but the fact is that it is also a state with its own international politico-economic interests and views. It is hard to discern the defense of any moral or religious principles in the above historic undertakings of the Church-State.

These doings of the Church, as a state in partnership with authoritarian rule, are in sharp contrast with the Biblical rendition, where Christ was persecuted for his political views by a tyrannical regime acting in complicity with the leadership of His church. Cubans today are also politically persecuted by a tyrannical regime. The question arises as to whether the leadership of the Catholic Church will side with the people or with the Castro regime.

Pope Francis probably, was not thinking of Magna Carta, the Lateran Treaty or the Reich Concordat, when he warmly received General Raul Castro in the Vatican earlier this spring, and he probably won’t be thinking about that foundational document for individual freedoms, the rule of law and for limits on the absolute power of the ruler or how the medieval Church spurned it when he travels to Cuba in September. But the questions of the Vatican’s support for authoritarianism and the Pope’s political ideology will be in the background of his visit nonetheless.

In political terms, Pope Francis is himself the head of an authoritarian state -an oligarchical theocracy where only the aristocracy -the Princes of the College of Cardinals- participate in the selection of the ruler. Most religions do not follow a democratic structure, but the Catholic Church is unique in that it is also a state recognized by international law.

Pope Francis may seem to be sailing against the winds of this structure in some of his carefully publicized “iconoclasms,” but clues he has left as to his political and economic thought regarding Cuba show someone very comfortable with certain status quos.

In 1998, then Archbishop of Buenos Aires, Monsignor Jorge Mario Bergoglio, as the Pope was then known, authored a book titled: “Dialogues between John Paul II and Fidel Castro.” In my reading of the Pope’s complex Spanish prose, he favors socialism over capitalism provided it incorporates theism. He does not take issue with Fidel Castro’s claim that “Karl Marx’s doctrine is very close to the Sermon on the Mount,” and views the Cuban polity as in harmony with the Church’s social doctrine.

Following Church tradition he severely condemns U.S. economic sanctions, but Pope Francis goes much further. He uses Cuba’s inaccurate and politically charged term “blockade” and echoes the Cuban government’s allegations about its condign evil. He then criticizes free markets, noting that “neoliberal capitalism is a model that subordinates human beings and conditions development to pure market forces…thus humanity attends a cruel spectacle that crystalizes the enrichment of the few at the expense of the impoverishment of the many.” (Author’s translation)

In his prologue to “Dialogues between John Paul II and Fidel Castro,” Monsignor Bergoglio leaves no doubt that he sympathizes with the Cuban dictatorship and that he is not a fan of liberal democracy or free markets. He clearly believes in a very large, authoritarian role for the state in social and economic affairs. Perhaps, as many of his generation, the Pope’s understanding of economics and governance was perversely tainted by Argentina’s Peronist trajectory and the country’s continued corrupt mixture of statism and crony capitalism.

His language in the prologue is reminiscent of the “Liberation Theology” movement that developed in Latin America in the 1960’s and became very intertwined with Marxist ideology. Fathered by Peruvian priest Gustavo Gutierrez, the liberation theology movement provided the intellectual foundations that, with Cuban support, served to orchestrate “wars of national liberation” throughout the continent. Its iconography portrayed Jesus as a guerrilla with an AK 47 slung over his shoulder.

John Paul II and Benedict XVI censured Liberation Theology, but after Pope Francis met with father Gutierrez in 2013 in “a strictly private visit,” L’Osservatore Romano, the Vatican’s semi-official newspaper, published an essay stating that with the election of the first pope from Latin America Liberation Theology can no longer “remain in the shadows to which it has been relegated for some years…”

The political ideology of the Argentinian Monsignor Bergoglio may not have been of any transcendental significance. But as Pope Francis, he is now the head of a state with defined international political and economic interests. These state-interests and personal ideology will be in full display in his upcoming visit to Cuba and the United States.

In “Dialogues between John Paul II and Fidel Castro,” Pope Francis speaks of a “shared solidarity” but, as with Pope Innocent III’s rejection of the Magna Carta, that solidarity appears to be with the nondemocratic illegitimate authority in Cuba and not with the people. This is a tragic echo of the Cuban wars for independence when the Church sided with the Spanish Crown and not with the Cuban “mambises” fighting for freedom. No wonder that when Cuba gained its independence, many Cubans saw the Church as an enemy of the new nation.

In his September visit Pope Francis will have a chance to reverse this history and unequivocally put the Church on the side of the people, especially with the black and mulatto majority in the Island. If he does not, history will judge him as unkindly as it has Innocent III. When the Castros’ tropical gulag finally fades into the past, Cubans will remember that this Pope had a choice between freedom and authoritarianism, just as his predecessor did eight hundred years ago, and picked the wrong side.

Azel_Jose4_

José Azel is a Senior Scholar at the Institute for Cuban and Cuban-American Studies, University of Miami and the author of the book “Mañana in Cuba.”

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CUBA AFTER THE CASTROS: THE LIKELY SCENARIOS

JOSÉ AZEL, June 14, 2015 – The Wall Street Journal –

Original here:   http://www.wsj.com/articles/cuba-after-the-castros-the-likely-scenario-1434319520

RaulMiguelDiaz-CanelPresident Raul Castro and First Vice-President and Probable Successor  Miguel Díaz-Canel

 The 2008 succession from Fidel to Raúl Castro was efficient and effective. But the popular hallucination outside the island—in which Gen. Castro intervenes forcefully to end the communist era and inaugurates a democratic, market-oriented Cuba—is not going to be how the story ends.

Given Raúl’s age—84—there will be another succession in the near future. The critical question is not what economic reforms Raúl may introduce, but what follows him.

José Ramón Machado Ventura, second secretary of the Communist Party, is also 84 years old and Cuba watchers do not see him as the next leader. If Miguel Díaz-Canel, 55, the first vice president of Cuba, ascends to the presidency, he will most likely be a “civilian” figurehead for the generals to present to the international community.

Raúl was head of the armed forces for nearly 50 years and now, as head of the country, he has appointed his military officers and military family members to positions in government and industry. One possible scenario after he is gone would be a reversion to a military dictatorship such as Cuba under Batista, Brazil from 1964-85, or Egypt today. Yet another outcome, equally disquieting, is possible.

By some estimates, including the University of Miami’s Institute for Cuban and Cuban-American Studies, the Cuban Revolutionary Armed Forces controls over 70% of the economy. Enterprise Management Group (GAESA), the commercial holding company for the Cuban Defense Ministry, is involved in all key sectors of the economy. Through government-owned subsidies, the company is heavily involved in tourism, retail sales, mining, farming and energy, and joint ventures with foreign investors.

Raúl, as a matter of survival not ideology, has introduced some tentative economic reforms, while continuing to expand the metamorphosis of his officers into businessmen. Some might present this as a positive development, where warriors exchange their weapons for calculators. But what does it mean for the future of Cuba when the Raúl era comes to an end and military officers are in political and economic control?

In a system where enterprises are state-owned and managed, the military officers-turned-business executives will enjoy the privileges of an elite ruling class. Yet it will not take long for the military elite to realize that managing government-owned enterprises offers only limited benefits—owning the enterprises is a far more lucrative option.

Once the Castro brothers are no longer in the picture, the military oligarchy might decide to champion a far-reaching but phony reform—that is, a manipulated privatization of the industries under their managerial control. Not unlike the rigged privatizations in Russia in the 1990s, an illegitimate and corrupt privatization process would give birth to a new class of government-created oligarchs—instant capitalist millionaires, the new Cuban “captains of industry.”

The Cuban population might not view these ownership changes as particularly undesirable or nefarious, mistakenly viewing them as a positive transition toward free markets and prosperity. The international community would likely also acclaim the mutated generals as agents of change bringing market reforms to Cuba. In the United States, of course, the change in U.S.-Cuba policy introduced by President Obama would be declared a success.

Cuban Communism, to be sure, would come to an end, leaving in its wake generals, new captains of industry and assorted other nouveau riche in charge of country devoid of democratic culture. And like Russia after the collapse of the Soviet Union, Cuba’s economy would be riddled with monopolies and oligopolies whose owners would have the power to stifle any pro-competitive policies or international investors that might threaten their position.

It is often argued that the introduction of economic reforms, even without political reforms, will lead sequentially and inexorably to democracy. As in the case of China after Mao, this is not necessarily, or even probably, the case.

Without profound political reforms, putative economic changes conducted by Cuba’s military will only transfer wealth from the state to a ruling military and party elite. It will not lead to democracy or prosperity.

Mr. Azel is a senior scholar at the Institute for Cuban and Cuban-American Studies, University of Miami, and the author of “Mañana in Cuba” (AuthorHouse, 2010).

Fidel-and-raul-Castro- as múmias do CaribeFather Time:  Always At Work

 

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Can Cuba Move Half its Economy to the ‘Non-State’ Sector?

From the Inter-Americanj Dialogue’s “Latin America Adviser” comes some interesting comments on the feasibility of shifting half of Cuba’s economy as measured by GDP to the non-state sector. The analysts are undoubtedly correct in arguing that the conditions are not yet in placed to permit an expansion of the private sector so as to constitute 50% of the economy.

However, as a statement of intention, Hernández comment is interesting. This objective may provide the impetus for intensifying the reform process in order to permit the expansion of the non-state sector to occur.

The original is located here: Inter-American Dialogue, Latin America Adviser, May 11, 2012

 Question:

Cuba wants to move nearly half of its economy to the “non-state” sector within the next five years, Communist Party official Lazo Hernández said last month in a speech in Havana. Currently, government-run businesses account for 95 percent of the island’s GDP, said  Hernández. Is the plan to move almost half of the country’s economy to private businesses realistic? Can the country’s tiny private sector absorb such an effort? Would such a move strengthen Cuba’s economy?

 Answers:

José Azel, senior scholar at the Institute for Cuban and Cuban- American Studies at the University of Miami:

Lazo Hernández announced that the country is seeking to transform its economy by increasing the economic participation of the ‘non-state’ sector tenfold. To accomplish this, the government is relying on its Draft Guidelines for Economic and Social Policy. This document proposes to chart Cuba’s economic future and states paradoxically that ‘central planning and not the market will be supreme in the actualization of the economic model.’ The centerpiece of this plan revolves around firing as many as a million state employees (20 percent of the workforce) who could then solicit licenses to become self-employed as ‘cuentapropistas‘ in precisely 181 specified trades.

Moreover, the guidelines insist that prices will be set according to the dictates of central planning and the plan will insure that any new ‘non-state’ economic activities (apparently the term ‘private sector’ is not to be spoken) do not lead to the accumulation of wealth. To fully appreciate the economic surrealism of the Cuban ‘reforms,’ it is useful to examine a handful of the 181 trades and activities that are authorized for self-employment and which are foreseen as becoming 50 percent of the country’s economic activity. These include: trimming palm trees, cleaning spark plugs, refilling disposable cigarette lighters, mattress repair, wrapping buttons with fabric, umbrella repair and natural fruit peeling. This bizarre list of permitted private service sector activities will not drive the economic development of the country. Cuba’s GDP today is made up primarily by tourism, the services of doctors abroad, nickel and a handful of agricultural exports. Hernández’s stated goal seems mathematically impossible given a private sector permitted only in subsistence-level activities. An impediment to real reforms is simply that without inspired democratic leadership, the set of long-held Marxist economic assumptions will not be swapped for another set of economic beliefs. These are not reforms to unleash the market’s ‘invisible hand,’ but rather to reaffirm the Castros’ clinched fist.”

Lorenzo Perez, member of the Association for the Study of the Cuban Economy and former deputy director of the Middle East and Central Asia Department at the IMF:

“An expansion of Cuba’s private sector will certainly strengthen the economy. The realism of moving half of the economy to the private sector over a five-year period will depend on the measures taken to attain this goal. While positive steps have been taken in recent months, the measures up to now have been too timid or contradictory to attain this goal. A significant expansion of the private sector would require the opening of most sectors of the economy to private initiatives, respect for private property and the rule of law, freedom for markets to operate and the establishment of a sustainable macroeconomic framework. The activities opened to the private sector are too few (some 200 activities) and continue to limit most private professional activities, thereby negating possible benefits from the country’s well-educated labor force. Insufficient institutional arrangements have been adopted to establish clear property rights and promote the creation of private companies. For example, land distributed to farmers has only been leased, while the creation of companies with unlimited capacity to hire labor is not envisaged. Markets are not operating freely; a substantial amount of food production has to be sold to the state at fixed prices, the private sector cannot carry out most foreign trade activities and a heavy tax burden discourages private investment and hiring. A sustainable macroeconomic framework does not exist with public finances and the balance of payments depends on politically motivated financial relations with Venezuela. No effective measures have been taken to restructure the external debt with most industrialized countries, including negotiations with the United States to settle political differences. As a result, Cuba continues to be isolated from the international economy and organizations.”

Carmelo Mesa-Lago, distinguished professor emeritus of economics and Latin American studies at the University of Pittsburgh:

“The plan to generate half of GDP from the non-state sector requires that 1.8 million workers are transferred from the state sector by 2014, tantamount to 35 percent of the labor force. In 2006-2010, the non-state sector shrank. Under Raúl’s reforms, the government dismissed only 140,000 unneeded state workers in 2011 (14 percent of the target). In that year, there were 357,000 self-employed people (7 percent of the labor force) out of which 209,600 were new and only 17 percent had been unemployed. In addition, from 2009 to 2011, 147,000 agricultural producers were granted usufruct contracts in unused state land (2.9 percent of the labor force), but much less in 2011 alone. Finally 1,500 cooperatives in production and services were created in 2011; the number of members has not been released but assuming 4 members per coop there would be 6,000 (0.1 percent). In summary, perhaps 300,000 jobs in the non-state sector were created in 2011 (5.8 percent of the labor force), which means that 1.5 million non-state jobs must be created in the next three years to reach the 1.8 million target, at an annual average of 500,000. That is impossible at last year’s growth rate. Thus, the structural reforms must be accelerated and deepened, for example, through significant tax cuts in the non-state sector, an expansion of self-employment to university graduates and the elimination of bureaucratic impediments. If this were the case and the targets of state worker dismissals and non-state job creation were met, then the economy would probably be strengthened. The state would save a lot on wages and the private sector, which has proven to be more efficient than the state sector, should increase production and productivity. But a lot of ‘ifs’ must materialize.”

Uva de Aragón, associate director of the Cuban Research Institute at Florida International University:

“It isn’t an easy goal, but it could be attainable if there is: 1) a change of mentality  and acceptance that actors in the nonstate economic sector have a right to profits, and that the creation of a middle class would be healthy for the country; 2) a transparent legal framework; 3) a tax code based on profits, with a moratorium of at least two years for new businesses; 4) expansion of the areas in which the non-estate sector can grow; 5) reduction and eventual elimination of bureaucratic red tape; 6) access to tools and raw materials, in a timely manner and at reduced costs; 7) sustainable markets, which will require among other things higher salaries and pensions for remaining state employees and retirees,  respectively; 8) significant advance in technology; 9) training of Cubans in businesses practices; 10) restructuring of monetary policies (the disparity between salaries in Cuban pesos and cost of products in convertible pesos cannot be maintained) and 11) capital. Where will the capital come from? Can a climate of stability be created to entice foreign investors? Will they allow Cubans in the diaspora to invest, even if only as partners with their relatives and friends? As changes take place, can the state continue to provide a safety net—education, healthcare, social services— for most Cubans? The changes needed are so deep they cannot be done too quickly; but a slow pace is as dangerous. Will Cuba find the needed steady rhythm to transform itself? I personally hope it does.”

José Azel, Uva de Aragon, Carmelo Mesa-Lago and Lorenzo Peréz

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